If you’re building a startup, odds are you’ve done ample research, have great ideas about how to develop your product, and have taken advice from the sages on how to market your company.
But what have you done as far as damage control is concerned? Do you have a plan in place for avoiding mistakes that cause many startups to fail? I wrote a similar article about this last year (Three Common Startup Mistakes). Didn’t read it? No problem – just click the link and it will take you straight to it.
If you stay cognizant of the three big mistakes many entrepreneurs make below, your chances of survival are much higher than that of your colleagues.
1. Don’t sell everything you own in order to fund the startup.
Many entrepreneurs make the mistake of selling off their estate in order to pay for their new company. Here’s the problem with that – you are left with nothing if your business flops. There is no point in bankrupting yourself on something that isn’t a sure thing…yet. It’s better to have plenty set aside in savings to give your business a fair shot at being profitable. Work out a budget and stick to it.
2. Don’t hire your friends or relatives.
I talked about this in the last article, too. This point is very crucial, so I really hope you pay attention. “A common attribute among successful companies is the ability to quickly pivot when problems arise and determine the best approach for adapting to meet ever-changing market and customer needs, which underscores the importance of hiring core team of smart people who already know the industry and its inherent risks.” The best approach is to hire people who share your vision, not your bloodline. (source)
3. Don’t assume you’ll be making money in a month.
Sadly, more startups fail than succeed. And most failures have one thing in common – inadequate planning. Take the time to develop a reasonable business model that will show you clearly where and when the revenue will start pouring in. Also, give yourself a reasonable timeline. It’s unrealistic to think you will have a disposable income within a month. Sales and business development take time, so give yourself that wiggle room. A good benchmark is to assume 6-12 months for income. And in the meantime, have a plan B for covering your living expenses.
Have any of you fallen into these traps? What methods did you use to overcome those mistakes? Leave us some feedback – we’d love to hear what you have to say!